FOMC committed to QE programme
25th June 2009
The Federal Reserve on Wednesday maintained its commitment to its huge debt buyback programme, leaving interest rates unchanged as expected and repeated that borrowing costs would remain exceptionally low for an extended period of time.
The US Central Bank kept the Fed Funds Rate within a range of zero to 0.25% and signalled fewer concerns on the risk of deflation. However, it added that inflation “would remain subdued for some time” and provided no hints on an imminent exit from its bold policy easing, despite fears among some that the recent stimulus could stoke significant price rises in the near future. The Fed said that it would hold to a previous pledge to buy $1.45 trillion in mortgage-related securities and $300 billion in longer-term government debt.
“Information received since the Federal Reserve Open Market Committee met in April suggests the pace of economic contraction is slowing,” the Fed said in its accompanying statement, at the end of a two-day meeting. “Conditions in financial markets have generally improved in recent months”. Nevertheless, the Fed cautioned that the economy would remain weak for some time, prompting the financial markets to price in that US borrowing costs would remain on hold until well into 2010.